SMM Morning Comments (Aug 22)

SHANGHAI, Aug 22 (SMM) –  

Copper: Prices of copper edged higher but still faced pressure as data from the Energy Information Administration showed bigger-than-expected builds in US fuel inventories last week. Three-month LME copper dipped to a low of $5,710/mt and closed up 0.2%, with the most-liquid SHFE October contract hovering around 46,400 yuan/mt, ending up 0.2% on the day. Limited support from macroeconomic development is likely to keep the contract at 46,200-46,600 yuan/mt, and LME copper at $5,710-5,750/mt today. Active spot trades and limited availability of seaborne copper may buoy premiums to 50-100 yuan/mt. 

Aluminium: The most-liquid SHFE October contract closed slightly lower at 14,325 yuan/mt last night as shorts added their positions and dragged prices from a high of 14,355 yuan/mt. Signs of recovery on the supply side may keep it trading between 14,300-14,400 yuan/mt today. Three-month LME aluminium fell 0.3% overnight and ended at $1,778.5/mt, after it came off from a high of $1,790.5/mt to a low of $1,774.5/mt. Trading range today is seen at $1,700-1,800/mt. 

Zinc: Shorts covered their positions amid a narrowed contango structure, sending three-month LME zinc some 2% higher overnight, to close at $2,285/mt. The most-liquid SHFE October contract followed its LME counterpart higher and grew 0.97% on the day to finish at 18,655 yuan/mt. Market sentiment eased amid expectations of a Federal Reserve interest rate cut, and this may cap downside room in prices. Today, the contract is seen trading between 18,400-18,900 yuan/mt, with LME zinc at $2,250-2,300/mt. 

Nickel: Three-month LME nickel lost earlier gains overnight as it fell to around the $15,780/mt level after tested resistance from the five-day moving average. Support from 15,700 yuan/mt settled it 0.2% lower on the day at $15,770/mt. Nickel inventories across LME-approved warehouses grew 372 mt to 150,012 mt. The most-liquid SHFE October contract remained at highs as longs stayed in the market. Departing shorts drove it to a high of 125,000 yuan/mt before it closed 0.1% higher on the day at 124,000 yuan/mt. Movement in funds should be closely monitored today. 

Lead: Three-month LME lead failed to shrug off pressure from the $2,100/mt level, as it slipped from a high of $2,094/mt and finished the trading day 0.68% higher at $2,075.5/mt. The most-active SHFE October contract broke resistance from 17,000 yuan/mt and hit a high of 17,190 yuan/mt, ending 0.65% higher on the day at 17,140 yuan/mt. Investors should remain cautious about it pulling back as it has diverged from moving averages. 

Tin: Three-month LME tin fell to an intraday low of $16,160/mt as the US dollar strengthened, and settled the trading day 1% lower at $16,330/mt. The most-active SHFE 2001 contract rebounded to around the daily moving average after loaded-up shorts dragged it to a low of 130,560 yuan/mt. It finished at 130,970 yuan/mt, down some 0.5% on the day. Support is seen from 130,000 yuan/mt today, with LME tin trading with support from $16,000/mt.